Progress Report 2012 The LEGO Group LEGO® bricks On average Laid end to Connecting produced in every person end... with the LEGO 2012 on earth owns Group 45.7 3.4 billions million Facebook ‘Likes‘ 86® LEGO bricks 5.2 x18 25 millions/hour million YouTube video views ...the number of LEGO® bricks sold in 2012 would reach more than 18 4.6 87 times around million LEGO® thousands/min. the world Club members Contents Introducing the LEGO Group Outside the LEGO Group 7 The LEGO Group 120 In dialogue with the world 14 Sustainability – the LEGO® way – how we listen and respond 29 Letter from Jørgen Vig Knudstorp, 135 Issues in a global supply chain – our approach CEO of the LEGO Group 149 Playing it forward - supporting our communities 153 Philanthropic outreach – access to quality play 2012 Progress and learning for children 38 Highlights 42 The value of play and learning Performance and compliance 47 Respectful collaboration 165 Governance 172 2012 performance data The brick 182 The LEGO Group’s policies, positions and 59 Playing safe – the safety of our bricks strategies 73 Sustainable parts – the environmental impact of 183 About the report our bricks 185 Assurance statement 188 Global Reporting Initiative and United Nations Making LEGO® play materials Global Compact compliance table 91 Sustainable production – reducing the impact of making LEGO® bricks 103 Safe workplaces – the health & safety of LEGO® employees 109 Smart people – smart products If you would like to read the LEGO Progress Report 2012 from a GRI perspective, please go to Global Reporting Initiative and United Nations Global Compact – the LEGO Group and its people compliance table at page 188 Introducing the LEGO Group The LEGO Group In the LEGO Group everything is about making children’s play with LEGO® toys as positive an experience as possible. We believe this is best done through high-quality products. The founder of the company Ole Kirk Kristiansen was determined that his company should always provide children with products where; ‘Only the best is good enough’. We still live by this creed. It is our mission to ‘Inspire and develop the builders of tomorrow’ – a reflection of our fundamental belief in the value of play and learning in society and for children in particular. Through this mission we serve the company’s ultimate purpose to inspire and develop children to think creatively, reason systematically and work collaboratively to Introducing the LEGO Group 7 release their potential to shape their own future. As a consequence of this it is natural for us to stand up for, and ensure, children’s right to play. The LEGO Group makes play experiences for children of all ages The range of products that the LEGO Group brings to the market is very broad and varied, building on the diversity, creativity and imagination of the consumers we serve. Our products range from the LEGO® DUPLO® range of pre-school products, the iconic brick in all its colours and sizes, play themes such as LEGO Friends, LEGO Technic and LEGO City, licensed themes developed with partners such as Star Wars and a series of licensed products including books, video games, storage solutions, apparel, bags, stationery and smaller accessories. For the older child and adults we market LEGO Technic, LEGO MINDSTORMS and exclusive collectors’ items. To complete the LEGO® world we have also designed board games and digital games built on the LEGO® idea of playful learning, to establish a bridge between the physical and digital world. Our financial performance 2012 marks the eighth consecutive year of growth for the LEGO Group, with sales of LEGO products growing considerably all over the world. The LEGO Group’s revenue increased by 25% in 2012 to DKK 8 The LEGO Group Progress Report 2012 23,405 million, and profit before tax amounted to Financial Highlights DKK 7,522 million in 2012. The LEGO Group LEGO® market position Today, the LEGO Group has a global market share of 8.6% which is an increase of 1.5 point compared to last year. We regard growth as the result of our (mDKK) 2012 2011 2010 constant focus on quality consumer experiences Revenue 23,405 18,731 16,014 and a way to inform us of how well we live up to our values. We want consumers to have a play experience which delivers satisfaction beyond Expenses (15,453) (13,065) (10,899) what they had expected whenever and wherever they interact with the LEGO Group or one of our Operating profit 7,952 5,666 4,973 products. We plan to continue the strategy of striving to be the best and not necessarily the biggest toy Financial income (430) (124) (84) manufacturer. Read more about our 2012 financial and expenses performance in the LEGO Group Annual Report. The LEGO Group in the world Profit before 7,522 5,542 4,889 • Our Headquarters: Billund, Denmark income tax • Concept and product development: Denmark, Germany, China and the USA Net profit for the year 5,613 4,160 3,718 • Own production: Denmark, Czech Republic, Hungary and Mexico • A small part of production is sourced from external The above financial indicators are taken from the LEGO Group’s Annual Report. The complete Annual Report can be found at www.lego.com suppliers, mainly Asian • No. of employees at 31.12.2012: 12,264 10 The LEGO Group Progress Report 2012 Introducing the LEGO Group 11 When it all began in 1932 1958 1974 The first LEGO® brick is introduced The LEGO Group adds figures to the and children can now enjoy a new type play experience and personality is now of play and learning experience a vital part of learning 1932 1980 1997 Ole Kirk Kristiansen, a Danish joiner and LEGO Education begins to develop The first computer game is launched carpenter, begins making wooden toys and publicise teaching materials - and a digital era for the LEGO Group to support the play and learning has begun experience with LEGO products important role in the town’s life and development Sustainability from a village of three houses and a general store ® in the 1930s to a town of approximately 30,000 – the LEGO way people today. As the company grew out of a small, rural society, the sense of community and obligation was there from birth and inherited by all later generations. However, as we become a global player in the toy industry, and as stakeholder expectations and demands increase, we understand that a more formalised approach to corporate responsibility and citizenship is necessary. This led to the LEGO Group signing the United Nations Global Compact in 2003. The LEGO Group strives to address its 10 principles, as In the LEGO Group we want to leave a positive reflected in this progress report. impact – for both our stakeholders and the wider community. We are committed to caring for the The LEGO Group’s promises society that children will inherit and to inspire and In 2008 we defined four key promises to our main enable them to build the society of tomorrow. stakeholders. Now, and in the future, these set the direction for everything we do when it comes to our This is how we describe our intent to integrate sustainability efforts and business in general. sustainability in our business, namely as a core part of our business strategy. Our efforts in support of The four promises as defined in the LEGO® Brand sustainability must be integrated in the way we run Framework: our business – ‘the LEGO® way’, where only the best is good enough. Play Promise: Joy of building, Pride of creation We want children of all ages to experience joy and Our approach to sustainability grows out of Billund, pride when exploring their creative potential with Denmark. This is where our founder Ole Kirk our products and services. We want parents to be Kristiansen set up his company and played an certain that the playful learning experience their 14 The LEGO Group Progress Report 2012 Introducing the LEGO Group 15 children have will develop the skills and confidence The four promises of the that will prepare them for the future. LEGO® Brand Framework Planet Promise: Positive impact We want to leave a positive impact in the world – be it in respect to our stakeholders or to the wider community. We are dedicated to improving the society our children will come to live in, and for them to build on. Partner Promise: Mutual value creation We want to ensure that it is a rewarding experience Mission Inspire and develop the builders of tomorrow for both the partner and the LEGO Group to work Vision Inventing the future of play together, whether the partner is a customer, business Play Promise Partner Promise partner or supplier. Joy of building. Pride of creation Mutual value creation Promises Planet Promise People Promise People Promise: Succeed together Positive impact Succeed together We want employees to experience the strong Spirit Only the best is good enough sense of purpose, spirit and collaboration, Values Imagination - Creativity - Fun creative adventure and execution excellence that Learning - Caring - Quality characterise the LEGO Group at our very best. We want people and our company to succeed together. To make a positive impact in line with our Planet Promise, we pay special attention to three focus areas: Pioneer Safety, Support Children’s right to grow, and Care for Nature, where the Respectful Stakeholder Dialogue underscores all of them. Tangible targets ensure we can manage our direction and accomplish the goals set for the company by 2015 and beyond. 16 The LEGO Group Progress Report 2012 Introducing the LEGO Group 17 The LEGO Group’s Planet Promise permanent target.